Kevin C. Berryman - Jacobs Engineering Group, Inc. Steven J. Demetriou - Jacobs Engineering Group, Inc.

Steven Michael Fisher - UBS Securities LLC Alan Fleming - Citigroup Global Markets, Inc. Jamie Anderson - Credit Suisse Securities (USA) LLC Jerry Revich - Goldman Sachs & Co. Andrew John Wittmann - Robert W. Baird & Co., Inc. Robert F. Norfleet - Alembic Global Advisors LLC Tahira Afzal - KeyBanc Capital Markets, Inc. Chad Dillard - Deutsche Bank Securities, Inc.

Good day and welcome to the Jacobs Second Quarter 2017 Earnings Call and Webcast. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Kevin Berryman, Chief Financial Officer and Executive Vice President. Please, go ahead. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Thank you, Andrew, and good morning and afternoon to all. We welcome everyone to Jacobs' 2017 second quarter earnings call. I will be joined on the call today by Steve Demetriou, our Chairman and CEO. As you know, our earnings announcement and Form 10-Q were released this morning, and we have posted a copy of this slide presentation to our website, which we will reference in our prepared remarks. Before starting, I would like to refer you to our forward-looking statement disclaimer, which is summarized on slide 2. Any statements that we make today that are not based on historical facts are forward-looking statements. Although, such statements are based on our current estimates and expectations and currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain and you should not place undue reliance on such statements as actual results may differ materially. There are a variety of risks, uncertainties and other factors that could cause Jacobs' actual results to differ materially from what may be contained, projected or implied by our forward-looking statements. For a description of some of the risks, uncertainties, and other factors that may occur that could cause actual results to differ from our forward-looking statements, see our Annual Report on Form 10-K for the period ended September 30, 2016 and, in particular, the discussion in Item 1, Business; Item 1A, Risk Factors; Item 3, Legal Proceedings; and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations; as well as other filings with the Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements. During today's discussion, we will make a number of references to non-GAAP financial measures. You'll find additional disclosures regarding these non-GAAP measures including reconciliations of these measures with comparable GAAP measures in the presentation that accompanies our prepared remarks. Again, this presentation can be found on our Investor Relations website, located at www.jacobs.com. Please now turn to slide 3 for a quick review of the agenda for today's call. Steve will begin with some comments on our results for the quarter, followed by a summary of backlog and market conditions for each of our four lines of business. I will then provide some more in-depth discussion on our financial metrics and results for each LOB. I will continue with some comments on our restructuring initiative and capital allocation, after which, Steve will finish with some closing remarks. We will then open it up for some questions. With that, I will now pass it over to Chairman and CEO, Steve Demetriou. Steven J. Demetriou - Jacobs Engineering Group, Inc.: Thank you, Kevin. Welcome, everyone, to our second quarter earnings call. Before I discuss our results, I'd like to acknowledge a significant safety excellence milestone at Jacobs. This month marks the 10th anniversary of Jacobs BeyondZero and our unquestionable commitment to safety excellence. Our relentless drive to achieve world-class safety performance is stronger than ever. So, it's with great pride to report that our year-to-date total recordable incident rate stands at an industry-leading 0.17. And last week, we continued our tradition of participating in the industry-wide Global Safety Week, which drove further engagement with our employees, customers and local communities on safety awareness and a commitment to further improvement. And now, a few opening comments regarding our second quarter. I'm very pleased with the significant progress we're making on the new strategy we presented at last December's Investor Day, which established the blueprint to transform Jacobs and drive profitable growth. Halfway through the first fiscal year of our multiyear strategic plan, we're measurably delivering on our commitment to realign our revenue portfolio, shed unprofitable business and drive to a higher value-added mix of projects and programs and demonstrating the early phases of achieving profitable growth. In the second quarter, this was evident by the significant increase in both gross margin and operating profit margin across the company. Specifically, adjusted gross margin reached 19% in the quarter, a significant jump from the 16% gross margin reported a year ago. This higher quality of earnings performance is due primarily to a combination of improved operational execution and a more value-added mix of business. Let me also make some additional comments regarding our top line results. The sequential fall in revenue burn was driven primarily by a drop in low-margin field services revenue. This decline was almost entirely related to our oil and gas exposure and caused by several of our backlogged EPC chemical projects with large field-related activities transitioning to the procurement and construction phases a bit later than we anticipated. Therefore, we expect field services revenue burn to rebound in the second half of this fiscal year and at higher margins than historical levels. In contrast, our high value professional services revenue was flat versus prior quarter consistent with our previous guidance. As such, we believe the more important trend is gross profit, which showed a sequential increase in the second quarter. On the cost side, we've continued to successfully drive productivity with adjusted SG&A cost down $22 million versus a year ago quarter, and now down $36 million year-to-date. As a result of both the margin improvement and cost efficiency, second quarter adjusted operating profit of $140 million, improved by $18.4 million versus the same period last year and on an adjusted operating profit margin basis, an increase of 165 basis points versus last year's second quarter. Overall, this led to a solid second quarter adjusted net earnings performance of $0.78 per share, which is up $0.03 per share over last year's second quarter. Looking forward, I'm also very pleased with our win rate momentum and growth prospects. Year-to-date sales bookings increased 6% versus last year and our total revenue in backlog of $18.5 billion is up on both a year-over-year and sequential basis. And even more encouraging is that the gross margin profile of our backlog is also up by approximately 100 basis points versus last year, indicating that we're continuing to execute on our new strategy to shift to a higher value-added portfolio to deliver profitable growth. We also continued to demonstrate solid cash flow and deployed capital consistent with our new corporate strategy in the second quarter. We purchased $51 million of shares during the quarter. We paid out $18 million in dividends and we completed a strategic Building & Infrastructure bolt-on acquisition, Aquenta Consulting, to strengthen our PMCM capabilities in Australia, New Zealand and across the Asia Pacific region. Moving to slide 5, on the back of strong sales bookings in both our Aerospace & Technology and Building & Infrastructure lines of business, total Jacobs revenue in backlog grew from $18.2 billion at the end of last year's second quarter to nearly $18.5 billion this most recent period. On a sequential basis, it's the same positive trend as our backlog is up more than $300 million versus prior quarter. Importantly, the higher value professional services component of our backlog continued to increase and has reached the highest level since the early part of fiscal year 2015. At $12.4 billion, our professional service backlog is $1 billion higher than a year ago quarter. We're also very pleased that the gross profit in our backlog has continued to increase and now stands as a percent of revenue approximately 100 basis points higher than a year ago period. We believe the positive growth in our backlog mix and margin are a direct result of our more disciplined sales focus and approach of targeting higher value work, and we're excited about the continuing potential growth prospects across the globe. I will now provide some additional commentary on each business over the next few slides. I'm now on slide 6. As a result of a very strong sales quarter, our Aerospace & Technology backlog increased significantly by $355 million to $5.5 billion and is up over $600 million versus the same period last year. And in addition, it is important to note that there is more than $400 million of additional wins that have not been placed into backlog due to the increasingly routine protests that are occurring during the awards of government contracts. The largest example of a recent sales win that has yet to be put in backlog is a very significant multiyear IT services contract with the U.S. Special Operations Command that is going through the protest process. We're confident that there'll be a favorable outcome and we're expecting that this will be added to our backlog soon. Our key programs continue to enjoy stable funding, including the Trump Administration's proposed Skinny Budget. Of particular note is the bipartisan congressional support for NASA's SLS and Orion programs, which underpin a significant portion of our work for the agency. While the longer-term implications of Brexit continue to be uncertain, there have been no negative implications to our UK business. Spending remains steady in the private sector, including the telecom industry, R&D facilities for automotive, and in the UK nuclear sector. Our win of the design build of an aero/acoustic wind tunnel for Honda highlights the continuing strength of our diversity. And our position in UK Nuclear New Build remains strong and our confidence in the market is high despite the near-term funding uncertainty for new gens program due to the Westinghouse bankruptcy. As we've discussed on previous calls, a majority of our base work is in programs of high national priority, including for defense and security programs. Our associated wins with the U.S. Air Force TRANSCOM and the U.S. Army Electronic Proving Ground highlight the stability of our portfolio. Our new business pipeline remains extremely robust with full funding of related programs expected. The one notable headwind is in the UK, where government funding reductions are impacting the Atomic Weapons Establishment where we are an equity partner. This is a key contributor to the second quarter year-over-year decline in operating profit in the A&T line of business. However, with the significant increase in sales bookings year-to-date and the continuing strength of our new business pipeline, our Aerospace & Technology line of business is well-positioned to both grow top line revenue and drive sequential quarterly profit improvement in the second half of this fiscal year. Moving to slide 7, our Buildings & Infrastructure line of business is also on a growth track, with another solid sales quarter and finishing with a strong backlog of $5.3 billion. This represents a $119 million increase sequentially and a significant $431 million increase versus a year ago. Our B&I backlog has now grown for six straight quarters, a testament to our sales team's targeted focus to capitalize on the positive dynamics we're experiencing across global Buildings & Infrastructure market. In our buildings sector, we're experiencing an uptick from a variety of subsectors and are pleased to announce one of our largest building design wins of the year, the expansion of the University of Texas School of Engineering. Other key wins include a multiyear professional services framework from Manchester City Council and Project Design Delivery Award for a large scale urban development in Western Melbourne. We're also experiencing strong growth in our program in construction management services, such as awards for the FBI Central Records Complex as well as for three U.S. Federal Courthouse projects. Our K-12 market leadership was further strengthened with an award from the El Paso Independent School District, one of the largest programs in the county's history. In the water and environmental services sector, we continue to utilize our technical expertise and market leadership position in the UK to provide integrated solutions to water clients globally as evidenced by recent awards for Roads and Maritime Services in New South Wales and the Western Harbour Tunnel and Beaches Link in Sydney. Moving to infrastructure, in Australia, overall market conditions are robust. Infrastructure Australia recently updated their high priority list of major projects over the next 15 years, totaling over $60 billion. This represents the highest number of approved projects in the country's history. New Zealand is also growing as the country moves into a significant transportation planning phase for its major infrastructure corridors. Our acquisition of Aquenta Consulting is going very well. We have achieved all of our near-term milestones and are already seeing increased client opportunities and awards throughout our expanded portfolio. In the U.S., Federal Highway opportunities are increasing with particularly strong government spending in Texas and California. Rail and transit spending continues to be positive across key markets. Recent wins include significant contracts for the Georgia Department of Transportation and the PennDOT Traffic Management project. In the UK, approvals were recently granted for the High Speed 2 rail program, and we also won a design services and collaborative delivery framework for the Highways England Smart Motorways program. Our global aviation sector continues to be strong, and we're successfully delivering on several large scale programs. We recently won a key award for major expansions at the Denver International Airport. And we've strengthened our position in the UK, supporting London Heathrow's third runway expansion. So, in summary, for Buildings & Infrastructure, we're clearly seeing significant benefits of the new line of business structure put in place last year. This includes stronger collaboration across regions on major prospects, while leveraging and connecting global subject matter experts to win local opportunities, all in all contributing to positive growth momentum. So, now, moving to slide 8, our Industrial line of business, the revenue in backlog at $2.4 billion stabilized versus prior quarter. However, as previously discussed, our Industrial backlog remains down versus last year due primarily to significant revenue burn on two large EPCM life sciences projects. The majority of this was passed through subcontractor revenue and consequently carried little to no margin. More importantly, the gross profit and margin in our Industrial backlog is up versus both last year and sequentially. This is as a result of a much higher value mix of recent sales bookings in this line of business. As we look forward, our life sciences business continues to be strong, and we're pursuing several key client opportunities, especially in gene therapy. However, there is some uncertainty on timing of these opportunities, driven by the changing U.S. geopolitical landscape. Our new life sciences strategy to provide end-to-end solutions and expand geographically, including commissioning, qualification and validation continues to be an attractive opportunity. We had several sustaining capital wins this quarter, helping balance out our project portfolio and further demonstrating progress on our stated growth strategy. The mining sector is showing modest signs of recovery as certain commodity prices have started to move up, particularly in copper. Projects deferred during the downturn are now restarting in early study phases. Assuming commodity price gains hold, we expect spending to increase early next year. Based on typical project sequencing, the mining recovery should also translate into growth opportunities for our Chemetics technology offering. Consumer goods and manufacturing spend is steady. Based on our subject matter expertise and strong relationships, we're capturing large expansion projects that are moving forward, including a recent award of a significant specialty chemical project for a confidential client. During the next two quarters, we also anticipate an increase in small capital and sustaining service projects as annual outages and planned maintenance work ramp up. Our global field services backlog was flat sequentially. We were successful in capturing an award for fluoroproducts production facilities for The Chemours Company and for a propanol expansion project for OXEA Corporation. Based on proposal activity, we expect an increase in new awards for long-term sustaining services, framework agreements and contract extensions during the second half of our fiscal year. So, in summary for our Industrial business, as several large EPC projects now move from the feed stage to the field, we expect these to contribute to increased revenue over the next several quarters. And while overall Industrial backlog should remain stable in the second half, we're positioned for growth in 2018, led by life sciences and the mining sector. And turning to slide 9, I'm very pleased to report that our second quarter Petroleum & Chemicals revenue in backlog at $5.3 billion remained relatively flat from the previous quarter and is up $155 million from last year despite the challenging economic environment and the delayed recovery in global oil and gas markets. Also on a positive note, our gross profit in backlog for this line of business trended up in the second quarter. The stability in revenue backlog and strengthening of margin are a result of our strong focus to improve our clients' capital efficiency and sustainment of their assets, as well as our improving momentum in the execution on the new P&C business transformation strategy. In our upstream segment, despite OPEC-led efforts to rebalance excess global supplies, crude oil inventories are still high and price uncertainty remains. Against this environment, a number of integrated majors have recently announced the divestiture of the Canadian oil sand assets. We see these oil sands consolidations as opportunities to help clients better integrate assets to drive efficiencies and scale. Meanwhile, U.S. rig counts continue to rise and increase in production particularly in Texas and North Dakota, is outgrowing current pipeline capacity and storage. We therefore expect to see development opportunities in U.S. pipeline and midstream infrastructure like our recent greenfield gas processing plant win in the second quarter. LNG bunkering infrastructure requirements are also forecast to grow to support an increase in LNG fuel ships, (20:19) with new facilities already under development across several continents. We continue to target infrastructure, offsites, utilities and jetty modification opportunities associated with the second wave of liquefaction projects. In our downstream segment, many Middle East producers have selectively cut production of heavier oil grades and are increasingly seeking joint venture projects with crude buyers in Asia. We expect a number of emerging opportunities as these markets rebalance. Meanwhile, the ability to export diesel and gasoline continues to benefit the U.S. refining industry, though clients remain cautious on CapEx. We're assisting U.S. producers to evaluate feedstock conversions to value-added chemical options. While the U.S. shale revolution and resurging make in America campaign by President Trump may support a further resurgence on U.S. petrochemical production, considerable uncertainty remains around what steps the government will ultimately take to further support and accelerate U.S. growth. And globally, we're expecting complex refineries to benefit from new MARPOL specifications for low-sulfur bunker fuels starting in 2020. We're also targeting several refining opportunities to optimize existing facilities for efficiency and naphtha processing from increasing light oil production. For the quarter, our sales team was successful in a number of downstream bids, including a world-scale polyethylene project and a U.S. Gulf Coast polyolefin project. Additionally, we were successful in winning the ONE Gas platform decomplexing project in the North Sea. And consistent with our strategy projections, global growth continues to be forecasted for the petrochemicals sector. We're targeting and we believe we're well-positioned to win several medium and large-sized chemical derivative prospects across the globe. So, overall, we're very pleased to see our Petroleum & Chemicals backlog stabilizing in what's been a challenging environment. And as we move into the execution phase on several EPC projects, we're optimistic of second half revenue growth and positive momentum into 2018. So, Kevin, back to you. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Thanks, Steve. And turning to slide 10, you will see a more detailed summary of our financial performance for the quarter. While I will provide more detail on restructuring in a later slide in the presentation, our restructuring cost for the quarter included the bulk of the final cost of our 2015 restructuring, plus an additional charge associated with a strategic realignment of our Europe, UK and Middle East regional operations related to our strategy to focus on a more profitable growth agenda. As a result of these costs, our GAAP EPS was down $0.13 to $0.41 per share versus the year ago period. However, when the cost associated with the 2015 restructuring and strategic changes in the Europe, UK and Middle East region are excluded, our adjusted earnings per share was, in fact, up 4% versus the year ago quarter to $0.78 per share. Turning to revenues, as already noted by Steve, we continue to be impacted by our oil and gas-related activities and specifically our field services revenue during the quarter. To better understand our revenue trends, I will focus on the sequential change in our revenue, given that it is more relevant to better understand how revenues will trend through the balance of the year. While Steve talked about this early in the call, I would like to point to the right side of the slide where we specifically highlight the change in revenue in Q2 versus Q1. It is noteworthy that the professional services revenue was indeed stable in Q2 when compared to Q1. And as a result, the sequential drop in revenue was almost exclusively driven by a decline in field services. This is due to the short-term delay in the ramp-up of certain backlog P&C projects from professional services work to field work. And while this change in the revenue mix between professional and field services helped improve our gross margin in the quarter, it is not the primary story behind the sequential improvement in gross margin performance in the quarter to 19% or an improvement of 260 basis points on a sequential basis. Importantly, approximately two-thirds of this margin increase was supported by improved underlying performance, driven by project execution, continued focus on cost efficiencies and our new strategic focus on reorienting our portfolio to higher margin business. This is a clear indication that our profitable growth strategy is continuing to gain traction. In fact, it is interesting to note that the Q2 gross margin level represents the highest unit gross margin for the company in over 15 years. Finally, the other one-third of the gross margin improvement was driven by the revenue mix of professional versus field services. It should also be noted that this field service mix benefit should be considered somewhat short-term in nature, given that we expect our field service business to gain momentum going forward through the balance of the year. Regarding backlog and as previously noted by Steve, revenue in backlog also grew in the quarter to $18.5 billion with a book-to-bill of 1.02 versus the trailing 12-month period, up from 0.94 in the year ago period. Specifically, our book-to-bill numbers were even stronger for the B&I business and our Aerospace & Technology business. So, when noting the fact that we are growing both revenue and gross margin in backlog quarter-over-quarter and year-over-year, it is clear that our profitable growth strategy is gaining momentum. Simply put, our revenue in backlog is growing sequentially and year-over-year, our gross margin percentage and absolute gross profit dollars in backlog are both growing sequentially and year-over-year, and finally, our reported gross profit burn is gaining momentum, both versus the year ago period and the previous quarter. Sequentially, the current quarter actually showed a $21 million gross profit improvement from Q1. On revenues that actually were down 9%. Completing our review of the P&L, our SG&A costs also continue to trend positively and are down a further $6 million versus year ago or down $22 million on an adjusted basis, and are now down a total of $36 million year-to-date. This continued reduction in fixed cost when combined with our gross margin improvement has led to an increased adjusted operating profit margin for the quarter sequentially and year-over-year, finishing at just over 6% in the quarter. This equates to $140 million in adjusted operating profit, an increase of $18.4 million versus our fiscal 2016 second quarter. Lastly, efforts to improve cash flows continued during the quarter, resulting in a working capital decrease of 30% versus the year ago quarter with DSOs also down from the prior year period, decreasing two days versus the fiscal year 2016 second quarter. As a consequence, Jacobs continues to be in a strong net cash position of $340 million. Moving to slide 11, given our strong consolidated financial metrics, it's not surprising to see that the Q2 operating profit levels continued to trend strongly positive for three of our four lines of business. Our A&T group was the only line of business to see a decrease in operating profit versus the year ago quarter as the impact of several rebid losses that we have previously disclosed continued to weigh on revenues for the group. In addition, our profits associated with our AWE JV in the UK decreased, given lower volume. As a result, our operating profit for A&T decreased by 18% versus the year ago quarter to $45 million. Importantly, however, we see our A&T business, both revenue and profit, gaining momentum in the second half, given our strong backlog that has been developed by the team. Our B&I business saw 1% improvement in revenue versus the year ago quarter and an improved margin, driven by solid performance in our PMCM work and a strong project execution that resulted in additional fee recognition in the quarter, both of which when combined more than offset an additional write-down associated with a large project. As a result, operating profit grew 3.6% versus the year ago period and operating profit margin increased 18 basis points to 7.5%. You will note that the margin rebounded from Q1 levels as we have previously projected. The Industrial line of business, meanwhile, saw a 23% decrease in revenues versus the year ago quarter, driven in part by the recent completion of several projects and prior to the mobilization on several new field services projects that we have already discussed. Regardless, overall operating profit for the group improved versus the fiscal year 2016 second quarter due to the year ago period being impacted by a litigation settlement and customer bankruptcy. Consequently, operating profit for the group increased by 94% versus the year ago quarter to $24 million and operating profit margin rose a significant 227 basis points to 4.1%. Finally, our P&C line of business continued to experience revenue weakness due to cyclical softness in the industry, finishing down versus both last quarter and last year primarily again driven by the lower field service activity previously discussed. At the OP (30:28) level, however, the impact of the reduction in revenue was more than offset by, one, a one-time benefit associated with the restructuring of our P&C-related Indian welfare trust program of $9.9 million and our focus on improving margin mix and project execution. These combined to support a significant 281-basis point improvement in operating profit margin to 6.4%, both a clear indication of our drive to improve operational performance and target more profitable work. Even when excluding the one-time welfare trust benefit, P&C operating margin still improves 100 basis points versus the year ago quarter to 4.6%. Moving to slide 12, some brief comments on our 2015 restructuring program, which we have substantially completed in Q2, you will note that the cost of the 2015 restructuring are now estimated to total $445 million. While this final level is higher than we previously communicated, the incremental amount was driven largely by our final closeout of the program, which prompted a full review of the lease write-downs incurred to-date. This resulted in a final additional reserve that incorporated our revised estimates of the expected market value of sub-lease income. In addition, as part of our implementation of our new corporate strategy, certain operations in our Europe, UK and Middle East region were restructured to realign the company against a new strategic focus in certain parts of the region, all to drive enhanced profitable growth opportunities. The restructuring in the region resulted in an EPS charge of $0.08 for the quarter. As a result of our updated cost estimates for the 2015 restructuring, our savings estimates have also increased. And we are now forecasting a total annualized ongoing savings of $285 million versus the expected final cost of $445 million. As our program to-date has incurred approximately $430 million in costs, there remain some minor remaining items expected to be charged in the second half of our fiscal year, which largely are surrounding and involve complex multi-office consolidations. The cost of these efforts is not expected to be more than $15 million in total which, to be clear, is included above in the final expected cost. Again, regarding the $30 million of strategic investments that we have previously discussed in our earnings calls, we continue to be on track relative to these investments, having spent approximately 5% against the efforts in the second quarter consistent with our expectation. As a result, the remainder of the strategic investments outlined as part of our strategy is expected to be incurred in Q3 and Q4. So, before turning it back to Steve for his closing comments, some quick comments on slide 13 regarding capital allocation. During the second quarter, we continued to execute against our three-year share buyback program, purchasing 900,000 shares during the quarter for a total of $51 million. We have now spent approximately $234 million of the $500 million buyback authorization repurchasing a total of 4.9 million shares in the process. As previously indicated, we plan to continue to purchase the remaining $266 million of this program in a balanced and measured approach throughout the remainder of the three-year period. In addition, we were excited to pay out our inaugural dividend of $0.15 per share during the most recent quarter and also, just recently declared our second quarterly dividend of $0.15 per share payable on June 16 to shareholders of record at the close of business on May 19. We believe our strong financial position continues to serve us well to invest not only in our business and drive our profitable growth strategy, but still providing flexibility to support our buyback program and dividend. To that end, our previously announced acquisition of Aquenta Consulting is going well with the integration plan well on track. With that, let me hand it back over to Steve. Steven J. Demetriou - Jacobs Engineering Group, Inc.: Thanks, Kevin. And turning to the final slide, we're pleased with our progress over the fiscal year-to-date and the significant improvements we're seeing in operational and financial performance. As we continue our shift to profitable growth, we remain vigilant and focused on achieving our three-year strategic objectives. As we review our line of business markets and sales pipeline at quarter end, we're more positive than we were last quarter and certainly since last year. Those markets most significantly impacted by weak commodity prices are beginning to show signs of life, or at the very least, appeared to have stabilized. Conversely, we're seeing strong continued growth in several of our other markets. And we are proactively focusing on those areas and regions exhibiting the best profitable growth prospects. Our outlook for the second half of fiscal year 2017 is for sequential revenue and profit growth with continuing strong underlying operational performance. As such, we remain on track to achieve our previously announced fiscal year's 2017 guidance. However, key to achieving this and our long-term growth objectives will be to continue our relentless focus on winning new profitable business and executing well on our project delivery. With that, I'd like to thank you for listening and we will now open it up for questions.

We will now begin the question-and-answer session. The first question comes from Steven Fisher of UBS. Please go ahead. Steven Michael Fisher - UBS Securities LLC: Thanks. Good morning. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Good morning, Steve. Steven Michael Fisher - UBS Securities LLC: Good morning, Kevin. Steve, why did the shift to chemicals field services take longer than expected? Was that just general business confident tied to commodity dynamics? And if so, what indication do you have that those projects are – will indeed pick up in the second half? Steven J. Demetriou - Jacobs Engineering Group, Inc.: Yeah. It's a minor shift. It's probably a little kind of do with the industry, but I'd say more just on the transition from the FEED to the execution phase on some of these EPC projects just went a little slower. But the confidence we have is that we're already in full speed execution as we sit here today. We have sort of our April data behind us. And so, that gives us the confidence that we're going to see sequential improvement in the next couple of quarters related to those post-FEED executions in the procurement and construction phase, as well as some other things on across other business lines. Steven Michael Fisher - UBS Securities LLC: Okay. And in terms of hitting the midpoint of your EPS guidance, I know you just said in your closing comments that you're anticipating a sequential revenue growth. To what extent are you contemplating, is that growth off of the most recent quarter or is it the first half in aggregate? Just kind of wondering if you're thinking about year-over-year revenue growth in the second half of the year to hit the midpoint of the EPS guidance. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Look, Steven, this is Kevin. We're taking certainly the Q2 numbers and saying we're going to sequentially grow off of those numbers. Steven Michael Fisher - UBS Securities LLC: Okay. That's helpful. Thanks a lot.

The next question comes from Andrew Kaplowitz of Citi. Please go ahead. Alan Fleming - Citigroup Global Markets, Inc.: Good morning, guys. It's Alan Fleming on for Andy today. Kevin, maybe you can just give us a little more color about how to think about the push and pull on gross margin here. I guess the question is, is19% adjusted gross margin a new normal for you guys with professional services backlog the highest it's been in two years. I mean, how does that kind of compare and contrast with how you're thinking about gross margin as the field services does rebound here over the next few quarters? Kevin C. Berryman - Jacobs Engineering Group, Inc.: Sure. Alan, some quick comments. The first point is, 19% is probably not the sustainable number going forward, but I don't want to make that comment without a very clear indication that underlying gross margin trends continue to be quite positive in terms of the wins that we have, our burn that's occurring and so on and so forth. The reason I make that comment is twofold, is that the mix on professional services versus field services will probably kick back more to normal levels in the back half of the year, as Steve just alluded to, the field service business kicks up, and that will take the gross margin down. While we like that business, we like the margin profile associated with that new field service business, which is actually higher than it has been historically. It still is a little bit lower than professional services, so we'll see some dampening. And so, if you kind of go back to my comments about talking about a third – two-thirds with two-thirds being underlying and one-third being the mix dynamic, we would expect the mix dynamic to kind of go away. And take the rest of the two-thirds might not be exactly sustainable at those levels, but certainly close to that and certainly above our Q1 or certainly year-to-date numbers for our gross margin for the year. So, a continuation in uptick as it relates to our figures. Alan Fleming - Citigroup Global Markets, Inc.: Okay. That's helpful, Kevin. And maybe I can switch gears to backlog. Backlog was up sequentially and compared to one of your main competitors, your bookings profile in the quarter looked a lot better. So, I know maybe some of that's due to your more small to midsized project focus and focus on sustaining CapEx. So, we also know that you've reorganized the sales structure of the organization here. So, how much of the backlog growth or stability here? Do you think the market is improving or your market is improving versus your ability to kind of outperform the markets and maybe take share in some of these markets? Steven J. Demetriou - Jacobs Engineering Group, Inc.: I think it's several things. When you look across the whole company, I would say that we're getting clear evidence that our new line of business structure across all four of these businesses are clearly allowing us to leverage global capabilities and to deliver local projects, something we really didn't do as well when we restructured regionally previously. When you look specifically at our line of business like Petroleum & Chemicals, I'd say the fact that we believe we're outperforming the rest of the industry in that particular segment is a combination of the type of projects that we participate in, more in the small and mid-cap sized projects. But also the strategy to focus on downstream, which we're really going after targeting the refining and chemical projects that allow us to have a stable backlog to offset the weakness in upstream. And we are moving into some more prudent risk EPC type projects, larger projects, which I talked about is creating this dynamic of some delayed field services revenue. But it's going to be higher quality field service revenue as we start to move into the second half and into 2018. So, I'd say it's a combination of new structure, some market dynamics like A&T and Building & Infrastructure, but also executing on our new strategy that we shared with all of you a few quarters ago. Alan Fleming - Citigroup Global Markets, Inc.: Okay. Very good, guys. Thank you.

The next question comes from Jamie Cook of Credit Suisse. Please go ahead. Jamie Anderson - Credit Suisse Securities (USA) LLC: Yeah. Hi. This is Jamie Anderson on for Jamie Cook. I was just looking for a little bit of clarity on the incremental investment. I know last time we talked, incremental investment was about $0.05 in the quarter. I don't know that we were adjusting it out. It seems like now we are. Could you just kind of clarify that? And then, I guess the implication is that the guide gets reduced $0.10. Is that just because of the revenue burn being a little more than anticipated on the P&C and Industrial business? If you could just help me with the puts and takes on that, that'd be helpful. Thanks. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Jamie, just to be clear, the $0.05 isn't adjusted out. It is incorporated into our operating figures. So, we did just want to make sure that you were clear because it has been a point of discussion in our previous results as to how much is being spent on those strategic investments, some of which are one-time, some of which are incremental investments. Relative to our strategy, that will be sustained longer term. So, to be clear, the $0.05 is in our adjusted figures and not adjusted out. Jamie Anderson - Credit Suisse Securities (USA) LLC: Okay. Cool. And then, just as a follow-up, at the Analyst Day, you talked about 15% of the business today is kind of unprofitable, 25% is breakeven. Not assuming that we can kind of get momentum on those, you could pick up anywhere between $50 million to $100 million of op profit improvement. Could you just tell us how those buckets are kind of tracking against your $50 million to $100 million targets? And where do you think we could potentially wind up towards the end of the year, given that backlog looks a little better, these investments could potentially take hold? That would be helpful. Thanks. Steven J. Demetriou - Jacobs Engineering Group, Inc.: Let me start just at a – kind of at a high-level strategic basis. I think everything we've talked about today, the margin improvement in professional services, up more than 250 basis points year-over-year, even field services when you look at stand-alone field services, the revenue that is in our P&L in the second quarter was up more than 100 basis points on a field services stand-alone comparison. And when you look at our backlog, as I mentioned earlier, the new wins and what's been – what's in our backlog now is much richer mix of business, about 100 basis points more gross margin as a percent of the revenue and backlog. And so, I think the strategy and some of the dynamics that you're seeing on a temporary decline in revenue, a significant increase in gross margin, quality of the gross margin, is clearly evidence that we're executing early on that strategy to not repeat winning breakeven or a loss-making business, and now winning profitable business and it's contributing to operating profit improvement and a richer backlog going forward. And I'd say, overall, that's the measure that we're on track in the first six months of our three-year strategy to significantly transform the SO (46:46) margin to final operating profit. Jamie Anderson - Credit Suisse Securities (USA) LLC: Okay. Great. Thanks so much. I'll hop back in queue.

The next question comes from Jerry Revich of Goldman Sachs. Please go ahead. Jerry Revich - Goldman Sachs & Co.: Hi. Good morning, everyone. I'm wondering if you folks can talk about within your Petroleum & Chemicals business, when do you expect year-over-year revenue growth? Obviously, the bookings have been very good and the backlog has been strong based on project cadence, when do you expect that to translate to year-over-year revenue growth. And if you can comment on chemicals specifically, I think that'd be helpful. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Well, perhaps not talking specifics but ultimately I think, we start to get to a point as we get to the end of this year, the beginning of next where we might be able to see that kind of dynamic occurring. This industry obviously continues to be certainly faced with a more stable but certainly a lower oil price and that continues to impact spend across the board, but I think the way to think about it is probably as we approach near the end of this year we might be able to see those kind of numbers happen. Jerry Revich - Goldman Sachs & Co.: Okay. And then, can you comment specifically about what you're seeing in mining, are you starting to see bookings coming through, where inquiry levels, I guess we have started to hear chatter about new projects picking up and I'm wondering if you're seeing that in your business as well, and if it benefited bookings in the quarter at all? Steven J. Demetriou - Jacobs Engineering Group, Inc.: Yeah. Look the – our backlog in mining is up year-over-year. A lot of that is driven by the major Rio Tinto win that we started putting on our backlog and are in the field now. But we are clearly now seeing a wave of studies underway. A lot of projects, multi-billion-dollar projects that were shelved are coming back on and we're talking across not only copper but iron ore, lead, zinc, gold, across all kinds of markets and regions where we're seeing some good activity in those study phases in Chile, Peru, Australia, even in certain parts of the Mediterranean on some of the metals. So, I would say, what we're seeing are small initiatives that we're winning that could lead to much bigger CapEx opportunities in 2018 and beyond. And so, the key decision is going to be – will these mining companies as they're now making better profits decide to pull the trigger and convert these studies to full projects. And if that happens, clearly we're going to see a 2018 and 2019, that's a lot better than the last few years of mining. Jerry Revich - Goldman Sachs & Co.: Terrific. Thank you.

The next question comes from Andrew Wittmann of Robert W. Baird. Please go ahead. Andrew John Wittmann - Robert W. Baird & Co., Inc.: Thank you very much. I guess I wanted to understand some of the margin profile in B&I. Kevin, it sounded like there's some pretty chunky moving parts in there with the write-down and an offset from a strong incentive fee. Can you just gives us the puts and takes, we can kind of get a better sense about what the margin profile is in there? Kevin C. Berryman - Jacobs Engineering Group, Inc.: Yeah. Look, I think if you at historical operating profit margins, the number that ultimately is there is probably not too far off of, let's call it, a normalized level. So, I think, it was positive. There were some additional hits that ultimately offset some of the one-time benefits. So, I think, you're netting to a, let's call it, a pretty stable number. Andrew John Wittmann - Robert W. Baird & Co., Inc.: Okay. And then I guess just to keep going to you, Kevin, just the cash flow and your balance sheet is strong right now, $340 million of net cash. You're doing the buyback, you're doing the dividend, you did an acquisition, still building cash. So, multiples in the industry are pretty high right now, just in general not just publicly traded, but the companies that have been bought out or taken out as well. Does the acquisition environment in the next 6 months, 12 months, probably stay a little bit more subdued because of those multiples or are you guys as aggressively looking at acquisitions today as you always have been? Kevin C. Berryman - Jacobs Engineering Group, Inc.: So look, I think that we continue to be proactively evaluating opportunities. I will tell you that within the structured approach that we have, we still believe that there continue to be opportunities to add value with some of the deals that we have been looking at. It doesn't mean that we execute against them because bids got to equal ask, but ultimately we do believe there continues to be value-added opportunities and I will tell you that it is very clear and a revision to our historical way of thinking about acquisitions. We're going to get a cash on cash return associated with these deals. So, the rigor of implementation, the rigor of the integration, the rigor associated with what the return on cash is relative to the investment are going to be the drivers to our decisions. And we're still finding an ability to make some value. Does that mean that there might be more limited opportunities given some of the high multiples? Perhaps, but we're still seeing some things that we are excited about. Andrew John Wittmann - Robert W. Baird & Co., Inc.: Okay. That's fair enough. Thank you.

The next question comes from Rob Norfleet of Alembic Global Advisors. Please go ahead. Robert F. Norfleet - Alembic Global Advisors LLC: Good morning, guys. Just a quick question on EBIT margins, I guess even when I assumed field services revenues are going to be ramping in the second half of the year and I normalized P&C margins for Q3 and Q4. Your operating profit number's going to be bumping up against your three-year goal of 5.8% to 6.3% that you outlined in your Investor Day. So, I guess my question is why should we not think of those as being conservative goals given that we're already at almost the low end that range here in the first half of year one? Kevin C. Berryman - Jacobs Engineering Group, Inc.: Well, look, we have a strategy that we've outlined and we outlined that six months ago, and ultimately we think that we're making really great progress against that strategy. We'll continue to update you as we work going forward, but we're very pleased with the incremental traction we're gaining on our profitability slate, which is really about ensuring that our portfolio's being reoriented to a more profitable business. So, look, I think if we hit the number sooner, we're not going to stop. So ultimately, the idea is that we believe that we'll continue to drive against the profitable growth agenda, but we're not at this particular point in time going to give you any update as it relates to what the long-term view might look like. Robert F. Norfleet - Alembic Global Advisors LLC: Great. Thanks. And last question, just can you talk about what your bid pipeline looks like in A&T especially new OE work versus rebid opportunities? Steven J. Demetriou - Jacobs Engineering Group, Inc.: Yeah. We – very consistent with what I said last quarter is that we really shifted from the rebid phase to new opportunities. And we have one of the richest pipelines that we've had in this business in a long time, if not ever. And part of our optimism on this business is not only the pipeline, but a real strategic shift in the way we're bidding for projects and winning them where we're creating more solutions for our clients, allowing us to get higher value because of the value that we're creating for our clients with these new business areas. And the strategy we talked about, weapon sustainment, nuclear as well as some other initiatives and we are on track in going after that. So, overall, it's a much richer pipeline we've ever seen and our winning rate is up over 25% year-to-date versus last year in this business for new bookings. So, the pipeline is good. Robert F. Norfleet - Alembic Global Advisors LLC: Great. Thanks for your time. I appreciate it.

The next question comes from Tahira Afzal of KeyBanc Capital Markets. Please go ahead. Tahira Afzal - KeyBanc Capital Markets, Inc.: Thank you very much. And Steve and Kevin, congratulations to your team on a very good quarter. Steven J. Demetriou - Jacobs Engineering Group, Inc.: Thank you. Tahira Afzal - KeyBanc Capital Markets, Inc.: First question is given how upbeat and confident you are and clearly we are seeing that now in backlog. Kevin, why would you not take the guidance range up a bit, should we at least assume the lower end of guidance is now looking slightly improbable? Kevin C. Berryman - Jacobs Engineering Group, Inc.: Well, look, we have not changed, Tahira, the range of our guidance. So, as we get through the course of the year, I would say the downside and the upside probably become a little less likely as we're halfway through the year now. But, ultimately, we think it's appropriate to continue to have that range, and we're feeling good about what the range is that we provided to you. I think the way to think about it, all of the good stuff relative to operating profit, margin and gross margin is really happening, that's great stuff. And I think it's really about, all right, so the backlog, how does it burn? Is it better than the midpoint or on the upside, if it's worse, then we are on the downside. So, look, I think it really is, given the dynamics of certain of the industries and markets we're in, that's really the range of our dynamic, less so about margin, more so about how quickly it will burn. Tahira Afzal - KeyBanc Capital Markets, Inc.: Got it, Kevin. And I guess a follow-up on the restructuring elements. You always said that you're watchful of macro dynamics and restructuring is like an ongoing process always for you. But assuming no major structural changes in the global economy, albeit at least a point where the restructuring elements start to diminish going forward? Kevin C. Berryman - Jacobs Engineering Group, Inc.: Look, well as always, we always will continue to look at driving our business become better, but I will tell you that at least for the 2015 restructuring, where we now have the identified items and it's just a matter before they get executed. So, I would say, the 2015 restructuring has a couple of items that'll hit us in the back half, but not much. And so the 2015 restructuring is for all intents and purposes done, we'll have some couple of execution items. You know that the other restructuring that we did, which is relative to a realignment of our business, but as it relates to 2015 restructuring, we're done. Tahira Afzal - KeyBanc Capital Markets, Inc.: Got it. Thank you very much, folks.

The next question comes from Chad Dillard of Deutsche Bank. Please go ahead. Chad Dillard - Deutsche Bank Securities, Inc.: Hi. Good morning. How should we think about the cadence of the Buildings & Infrastructure segment in the second half of 2017? You're currently running at a low-single-digit revenue growth rate, but your backlog has been at the upper-single-digits for about past couple of quarters. So, there's clearly a delay between the award and the execution. So, first of all, what's driving that? And are you starting to see those headwinds abate? Steven J. Demetriou - Jacobs Engineering Group, Inc.: Let me just talk about the market and our pipeline a bit and maybe Kevin can talk a little just about how it's translating in the near term. But look, the market dynamics are very positive and it's happening globally. If you just start with roads and highways, aging infrastructure, new governments in place almost in all of our major markets. All are coming together to address the pent up demand to accelerate the improvements upgrades on roads and highways and we're seeing more funding certainty. And so, we're very bullish as we look to the next several quarters and into 2018 on that segment. Even funding opportunities and things like our K-12, the education sector where it's a big part of our core market, a lot of bond issues, they're creating funding. Aviation, we've mentioned several times we're in the midst right now of some very important prospects that we believe we're going to be successful on that are going to continue this significant momentum on what we call our winning streak in aviation that is ahead of us. Even things like U.S. courthouses, which many years ago was a big part of our business and there was a lot of activity, we're seeing a resurgence of opportunities in U.S. courthouses. And then, geographic expansion, we're working on some interesting growth opportunities in places like the Middle East, which we should be able to talk about some more over the next few quarters and some platforms for growth in Asia Pacific. So, you put it all together, our diversified portfolio and the market dynamics and our new strategy, as I mentioned before, our line of business strategy where we're now leveraging our global capabilities and subject matter experts and multi-office execution opportunities to go win local opportunity is clearly on an on an accelerated momentum. So, I think, we're bullish on continued backlog growth in this business, and it will translate into revenue growth. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Let me just add real quickly that, yeah, the momentum is building in that business. And look, it builds over time, right, to the point of when the backlog comes in and I would say that we would expect to see some revenue improvements as we go through the back half of the year and hopefully momentum will then continue on into 2018 as it relates to the momentum that Steve was alluding to. Chad Dillard - Deutsche Bank Securities, Inc.: That's helpful. And then just a question on your other corporate expenses, it looks like it's running at about half the typical run rate if I look back to the past couple of quarters. Just want to understand, is that a new normal, are there any one-time items that I should be aware of? And then just secondly on the cost savings benefit, the incremental cost savings benefit, how should we think about the cadence for the rest of 2017 versus 2018 in terms of the incremental benefit that you realized? Kevin C. Berryman - Jacobs Engineering Group, Inc.: Yeah. Just a quick comment, it was a little bit lower than normal. We had a reserve that was released in the corporate numbers in the quarter, so that openly took it down from what is the normal historical run rate. So, I think you should still think about the run rate kind of being at the numbers that we've seen historically as it relates to the balance of the year. Chad Dillard - Deutsche Bank Securities, Inc.: Great, and then on the cost savings? Kevin C. Berryman - Jacobs Engineering Group, Inc.: On cost savings relative to the corporate numbers? Chad Dillard - Deutsche Bank Securities, Inc.: Well, just a cadence of how I should think about the benefits realized between the rest of 2017, 2018. Kevin C. Berryman - Jacobs Engineering Group, Inc.: Well, look, they will continue to build, obviously. Most of the actions that we've taken have been incurred in 2017 first half. So, those numbers will start to build and the remaining small items probably won't see much of the benefit in this year, but they're minor as it relates to the total. So, by the end of this year, we're at a full run rate of the $285 million in savings. Now, as we have suggested to you when we outlined in our Investor Day, we're going to be now starting to spend some of that money back and specifically that's why we called out the strategic investments, which were approximately $30 million this year. So, you won't see all of that hit the P&L because we're reinvesting back into our profitable growth strategy. Chad Dillard - Deutsche Bank Securities, Inc.: Great. Thank you very much. I'll leave it there.

This concludes our question-and-answer session. I would like to turn the conference back over to Steven J. Demetriou, Chairman and Chief Executive Officer, for any closing remarks. Steven J. Demetriou - Jacobs Engineering Group, Inc.: Okay. Thanks, everyone, for calling in today. We're excited about the positive momentum in executing our strategy, and we're going to stay focused to continue on that path forward. Look forward to talking to you next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.